2010-3612. Federal Home Loan Bank Housing Associates, Core Mission Activities and Standby Letters of Credit

AGENCY:

Federal Housing Finance Agency, Federal Housing Finance Board.

ACTION:

Final rule.

SUMMARY:

The Federal Housing Finance Agency (FHFA) is transferring regulations of the former Federal Housing Finance Board (Finance Board) to the FHFA's regulations. These regulations address, respectively, Federal Home Loan Bank (Bank) housing associates, the Banks' core mission activities, and Bank issuance of standby letters of credits. FHFA is not making any substantive amendments to these regulations, and is making only those changes that are necessary to accomplish the transfer and to account for the fact that FHFA has succeeded the Finance Board as the regulator for the Banks.

DATES:

This rule is effective March 26, 2010.

FOR FURTHER INFORMATION CONTACT:

Neil R. Crowley, Deputy General Counsel, 202-343-1316, [e-mail], Office of General Counsel, Federal Housing Finance Agency, Fourth Floor, 1700 G Street, NW., Washington, DC 20552. The telephone number for the Telecommunications Device for the Deaf is [phone].

SUPPLEMENTARY INFORMATION:

I. Background

On July 30, 2008, the Housing and Economic Recovery Act of 2008 (HERA), Public Law 110-289, 122 Stat. 2654 (2008), became law and created FHFA as an independent agency of the Federal Government. Among other things, HERA transferred to FHFA the supervisory and oversight responsibilities over the Banks that formerly had been vested in the now abolished Finance Board. The Banks continue to operate under regulations promulgated by the Finance Board until such time as the existing regulations are supplanted by regulations promulgated by FHFA.

II. The Final Regulation

The final regulation relocates rules addressing Bank housing associates from part 926 of the Finance Board regulations to part 1263 of the FHFA regulations; the Banks' core mission activities from part 940 of the Finance Board regulations to part 1265 of the FHFA regulations and Bank issuance of standby letters of credit from part 960 of the Finance Board regulations to part 1269 of the FHFA regulations. This rulemaking is part of FHFA's efforts to transfer the regulations of the former Finance Board from 12 CFR chapter IX, to 12 CFR chapter XII, which contains the FHFA regulations. The rule also makes conforming changes to references to reflect the new part numbers and will add to the new parts definitions that are contained in part 900 of the Finance Board regulations and are applicable to all regulations contained in 12 CFR chapter IX (but would not be applicable to the regulations after they are transferred to 12 CFR chapter XII). The rule also changes references such as those to the Finance Board, to conform to statutory changes made by HERA. Authority citations in each part also are being amended to conform to statutory changes made by HERA. Finally, the rulemaking will revise newly designated 1264.6(a) to update the address for submitting appeals of a Bank's decision to deny an application for certification as a housing associate. All the changes are either technical or conforming in nature, and no substantive changes are being made to any requirements contained in the regulations.

III. Notice and Public Participation

FHFA finds that good cause exists for adopting these rule changes as a final rule without public notice and comment under 5 U.S.C. 553(b) because the changes simply relocate and redesignate existing Finance Board regulations while making only minor technical and conforming changes to the existing rules. No substantive changes are being made to the regulations. Thus, FHFA believes that public comments are unnecessary and would serve no purpose. The rulemaking reflects the fact that HERA transferred the oversight functions of the Finance Board to the FHFA and is part of the effort to relocate Finance Board regulations from 12 CFR chapter IX to 12 CFR chapter XII.

IV. Paperwork Reduction Act

The information collection contained in the current Federal Home Loan Bank Housing Associates regulation, has been assigned control number 2590-0001 by the Office of Management and Budget (OMB). Neither the transfer of this regulation from part 926 to part 1264 nor any of the conforming changes will substantively or materially modify the approved information collection. The other regulations, and any technical or conforming amendments being made by this rulemaking, do not contain collections of information pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). As a consequence, FHFA has not submitted any information to the Office of Management and Budget for review.

V. Regulatory Flexibility Act

The final regulation applies only to the Banks, which do not come within the meaning of small entities as defined in the Regulatory Flexibility Act (RFA). See 5 U.S.C. 601(6). The final regulation is also purely administrative in nature and does not alter any requirements currently applicable to the Banks. Therefore in accordance with section 605(b) of the RFA, FHFA certifies that this final regulation will not have significant economic impact on a substantial number of small entities.

List of Subjects

12 CFR Parts 926 and 1264

• Community development
• Credit
• Federal home loan banks
• Housing
• Reporting and recordkeeping requirements

12 CFR Parts 940 and 1265

• Community development
• Credit
• Federal home loan banks
• Housing

12 CFR Parts 960 and 1269

• Community development
• Credit
• Federal home loan banks
• Housing
• Letters of credit

For the reasons stated in the preamble, FHFA hereby amends chapters IX and XII, of title 12 of the Code of Federal Regulations as follows:

CHAPTER IX—FEDERAL HOUSING FINANCE BOARD

PART 926—[REDESIGNATED AS PART 1264]

1. Transfer 12 CFR part 926 from chapter IX, subchapter D, to chapter XII, subchapter D and redesignate as 12 CFR part 1264.

PART 1264—FEDERAL HOME LOAN BANK HOUSING ASSOCIATES

2. The authority citation for newly redesignated part 1264 is revised to read as follows:

Authority: 12 U.S.C. 1430b, 4511, 4513 and 4526.

3. Amend newly redesignated part 1264 as indicated in the table below:

Amend:	By removing the reference to:	And adding in its place:
§ 1264.2	part 950 of this chapter	part 950 of this title.
§ 1264.3(a), Introductory text	§ 926.4	§ 1264.4.
§ 1264.3(b)	§ 950.17(b)(2) of this chapter	§ 950.17(b)(2) of this title.
§ 1264.3(b)	§ 926.1	§ 1264.1.
§ 1264.4(a)	§ 926.3(a)(1)	§ 1264.3(a)(1).
§ 1264.4(b), Introductory text	§ 926.3(a)(2)	§ 1264.3(a)(2).
§ 1264.4(c)(1)	§ 926.3(a)(3)	§ 1264.3(a)(3).
§ 1264.4(d)	§ 926.3(a)(4)	§ 1264.3(a)(4).
§ 1264.4(e)	§ 926.3(a)(5)	§ 1264.3(a)(5).
§ 1264.5(b)	part 925 of this chapter	part 1263 of this title.
§ 1264.6(b)	§ 926.5(c)(3)	§ 1264.5(c)(3).

4. In newly redesignated part 1264 revise all references to “Finance Board” to read “FHFA”.

5. In newly redesignated § 1264.1, add definitions for “Act,” “Bank,” and “FHFA” in correct alphabetical order to read as follows:

§ 1264.1

Definitions.

* * * * *

Act means the Federal Home Loan Bank Act as amended (12 U.S.C. 1421 through 1449).

Bank written in title case means a Federal Home Loan Bank established under section 12 of the Act (12 U.S.C. 1432).

FHFA means the Federal Housing Finance Agency.

* * * * *

6. In newly redesignated § 1264.6, revise paragraph (a) to read as follows:

§ 1264.6

Appeals.

(a) General. Within 90 calendar days of the date of a Bank's decision to deny an application for certification as a housing associate, the applicant may submit a written appeal to FHFA that includes the Bank's decision resolution and a statement of the basis for the appeal with sufficient facts, information, analysis and explanation to support the applicant's position. Send appeals to the Deputy Director for Federal Home Loan Bank Regulation, Federal Housing Finance Agency, 1625 Eye Street NW., Washington DC 20006, with a copy to the Bank.

* * * * *

CHAPTER IX—FEDERAL HOUSING FINANCE BOARD

PART 940—[REDESIGNATED AS PART 1265]

7. Transfer 12 CFR part 940 from chapter IX, subchapter F, to chapter XII, subchapter D and redesignate as 12 CFR part 1265.

PART 1265—CORE MISSION ACTIVITIES

8. The authority citation for newly redesignated part 1265 is revised to read as follows:

Authority: 12 U.S.C. 1430, 1430b, 1431, 4511, 4513 and 4526.

9. Revise newly redesignated § 1265.1 to read as follows:

§ 1265.1

Definitions.

As used in this part:

Acquired member assets or AMA means those assets that may be acquired by a Bank under part 955 of this title.

Advance means a loan from a Bank that is:

(1) Provided pursuant to a written agreement;

(2) Supported by a note or other written evidence of the borrower's obligations; and

(3) Fully secured by collateral in accordance with the Federal Home Loan Bank Act (12 U.S.C. 1421 through 1449) and applicable regulations.

Bank written in title case means a Federal Home Loan Bank established under section 12 of the Federal Home Loan Bank Act (12 U.S.C. 1432).

SBIC means a small business investment company formed pursuant to section 301 of the Small Business Investment Act (15 U.S.C. 681).

Targeted income level means:

(1) For rural areas, incomes at or below 115 percent of the median income for the area, as adjusted for family size in accordance with the methodology of the applicable area median income standard or, at the option of the Bank, for a family of four; and

(2) For urban areas, incomes at or below 100 percent of the median income for the area, as adjusted for family size in accordance with the methodology of the applicable area median income standard or, at the option of the Bank, for a family of four.

CHAPTER IX—FEDERAL HOUSING FINANCE BOARD

PART 960—[REDESIGNATED AS PART 1269]

10. Transfer 12 CFR part 960 from Chapter IX, subchapter G, to Chapter XII, subchapter D and redesignate as 12 CFR part 1269.

PART 1269—STANDBY LETTERS OF CREDIT

11. The authority citation for newly redesignated part 1269 is revised to read as follows:

Authority: 12 U.S.C. 1429, 1430, 1430b, 1431, 4511, 4513 and 4526.

12. Amend part 1269 as indicated in the table below:

Amend:	By removing the reference to:	And adding in its place:
§ 1269.1, Definition of SHFA associate	§ 926.1	§ 1264.1.
§ 1269.1, Definition of SHFA associate	§ 926.3(b)	§ 1264.3(b).
§ 1269.2(b)	§ 960.4(a)(2)	§ 1269.4(a)(2).
§ 1269.2(c)(1)	§ 950.7 of this chapter	§ 950.7 of this title.
§ 1269.3(a), Introductory text	§§ 950.17(b)(1)(i) or (ii) of this chapter	§§ 950.17(b)(1)(i) or (ii) of this title.
§ 1269.3(b)	§§ 950.17(b)(2)(i)(A), (B) or (C) of this chapter	§§ 950.17(b)(2)(i)(A), (B) or (C) of this title.
§ 1269.4(a)(1)	§§ 950.17(b)(2)(i)(B), 950.17(d) or 969.2 of this chapter	§§ 950.17(b)(2)(i)(B), 950.17(d) or 969.2 of this title.
§ 1269.4(c)	part 950 of this chapter	part 950 of this title.
§ 1269.5(b)(1)	§§ 960.2 or 960.3	§§ 1269.2 or 1269.3.
§ 1269.5(b)(2)	§§ 950.7(d), 950.7(e), 950.8, 950.9 and 950.10 of this chapter	§§ 950.7(d), 950.7(e), 950.8, 950.9 and 950.10 of this title.

13. In newly redesignated § 1269.1, add definitions for “Act,” “Bank,” “Community lending,” and “NRSRO” in correct alphabetical order to read as follows:

§ 1269.1

Definitions.

* * * * *

Act means the Federal Home Loan Bank Act as amended (12 U.S.C. 1421 through 1449).

* * * * *

Bank written in title case means a Federal Home Loan Bank established under section 12 of the Act (12 U.S.C. 1432).

* * * * *

Community lending means providing financing for economic development projects for targeted beneficiaries, and, for community financial institutions (as defined in § 1263.1 of this title), purchasing or funding small business loans, small farm loans or small agri-business loans (as defined in § 950.1 of this title).

* * * * *

NRSRO means a credit rating organization registered with the Securities and Exchange Commission as a nationally recognized statistical rating organization.

* * * * *

Dated: February 15, 2010.

Edward J. DeMarco,

Acting Director, Federal Housing Finance Agency.